BofA Merrill Lynch cuts 2014 gold forecast by 17% to $1,294

The outlook for gold
in 2014 is looking positively dicey if you go by the views of several investment banks lately.

Bank of America Merrill Lynch on Friday became the latest investment bank to drop its 2014 forecast for gold, cutting its view by 17.2% to $1,294 an ounce.

\”Gold prices have stabilized and they could remain supported as the U.S. reaches the debt ceiling. However, we believe the focus of investors remains firmly on a gradual normalization of U.S. monetary policy. Hence, our base case anticipates sustained headwinds to gold prices,\” says Daniel Lian and other analysts in a note.

\”Given the unfolding rebound of global economic growth, we believe the more cyclical precious metals, including silver, are likely to outperform gold.\”

As for silver
, Merrill sees prices ending the year around $24.31 an ounce, which is just slightly off earlier estimates. For 2014, they\’ve dropped their estimate by 4.5% to $26.38 an ounce, while for 2015, silver is forecast to average $31.53 an ounce.

Merrill is hardly alone here, and perhaps even a bit tardy. Earlier this week, Citigroup analysts said they think gold prices will push below $1,250 an ounce before the year end (also their average 2014 price), saying the Fed\’s surprise decision not to taper has not really changed the direction of gold. Morgan Stanley came out the same day with a call for bullion to average $1,200 to $1,350 an ounce in 2014 before heading lower.

Ahead of these calls, Goldman Sachs said the week prior that they\’re bearish going into 2014, and head of commodities research Jeffrey Currie has publicly said they wouldn\’t rule out gold dropping below $1,000 an ounce in the near term.

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